Individuals that have transferred out of defined benefit pension schemes are being hit with requests to give back part of that money, after errors with contracting out data have been uncovered.
Defined benefit (DB) pension schemes have until October 2018 to check their records against the ones being held by HM Revenue & Customs (HMRC), after discrepancies were found in 2016, leading to suggestions people may have received erroneous state pension payments.
Between 1978 and 1997, employers sponsoring DB pension schemes could contract their employees out of the additional state pension, as long as the scheme paid a comparable guaranteed minimum pension (GMP).
The benefit of contracting out was that both employer and worker had a reduction in their National Insurance contribution.
Sir Steve Webb, at the time pensions minister, ended contracting out in 2016, which prompted the final deadline from HMRC for schemes to check their data.
FTAdviser reported in March that as many as 43,600 pensioners could have to give back up to £50,000 already received from their company pensions due to these mistakes.
However, The Pensions Ombudsman has been receiving cases regarding errors in contracting out data in pension transfers, which makes the issue even more complicated, as the money is no longer in the pension scheme.
Tony Attubato, head of early resolution at The Pensions Ombudsman, said: "It is a quite complex area. It is very hard for a member to appreciate that a GMP might be wrong - most members wouldn't have known that they were being overpaid. Schemes are quite sympathetic to that.
"Each case needs to be looked based on its own circumstances, and on the detail on what actually happened, and whether it was fair for the member to have thought that what they were being told was correct."
The regulatory body doesn't have, however, specific numbers on how many cases it has received specifically regarding contracting out, as it doesn't record why the overpayment occurred.
Mr Attubato, who was originally employed by The Pensions Advisory Service (Tpas) dispute resolution before it was merged with The Pensions Ombudsman, argued schemes have the right to recoup the money.
He said: "The law is reasonably clear - even if it wasn't the member's fault, trustees have the right to correct it, and potentially to recover it.
"If someone in that situation came to us we would have to explain that the law is on the side of the pension scheme. There are some legal defences available to a member to perhaps restrict to a limit the amount of recovery, and we would help the member explore to see if any apply to them."
Pension experts, however, believe that this situation is so complicated that few schemes will attempt to recoup the wrongly paid out cash.
Pauline Armitage, a guaranteed minimum pension (GMP) reconciliation specialist, said: "Unless it is an egregious error and the transfer value is hugely overstated, I think the trustees would probably write it off or look to the administrators to recompense them if it is clearly their fault.